The Role of Trade Policy in the Performance of Nigerian Agricultural Sector: A Time Series Analysis

Abstract

There has been an increasing interest in understanding the role of trade policy in agricultural performance over the years. This time-series study investigates the impact of trade openness and domestic currency rate on agricultural performance in Nigeria within the period, 1981-2019. Using the autoregressive distributed lag (ARDL) approach, the study confirmed that there exists a long-run relationship between trade policy and agricultural performance in Nigeria. The result showed that trade openness has a significant and positive effect on agricultural performance in Nigeria. Further, the study confirmed that trade openness contributes more to agricultural performance in the long-run than in the short-run. However, exchange rate impacted negatively and significantly on agricultural performance in the long-run. Meanwhile, the short-run estimates showed that exchange rate has a significant and positive effect on agricultural performance. More so, it was gathered that interest rate affects agricultural performance negatively in Nigeria. There is need for government to embark on outward looking trade policy that supports the agricultural industry in terms of its exportation of indigenous commodities and stimulation of output growth.

Keywords: Agricultural output, trade openness, exchange rate, interest rates, ARDL.

JEL Classification: Q19, F13, E52.

DOI: 10.7176/JESD/12-16-08

Publication date:August 31^st 2021